Most mortgage brokers require you to hold homeowners insurance, and since your home is likely a substantial portion of your net worth, wouldn’t you protect your home with this essential insurance even if it weren’t required?
But what many Oklahoma homeowners don’t realize is that home insurance doesn’t just cover obvious events like a fire or hail damage. Insurance policies are as varied as the homeowners who buy them. There are many types of coverage that fit a variety of lifestyles and risk factors. There are also a lot of variables that can affect the cost of a policy.
While all homeowners insurance policies aren’t created the same, there are some key elements that share a common thread. Let’s explore five basic things every Oklahoman should know about home insurance.
#1 What Does a Standard Homeowners Insurance Policy Cover?
Here’s the short answer: A typical homeowners policy is designed to cover damage to a home, the personal property within it and claims against the homeowner, up to a certain amount.
The causes of damage or loss can vary but are generally known as “named perils” in an insurance policy.
This refers to broad coverage for damage to a home or permanent structures--- like attached garages and sheds-- on a property. Damage can be caused by any number of events, including things like:
- Fire and smoke
- Lightning Strikes
- Vandalism & malicious mischief
- Damage from an aircraft, car or vehicle
- Falling objects
- Ice and sleet weight damage
A Word About Tornadoes
As Oklahomans know, living here means living with tornadoes. Damage from these natural disasters can be catastrophic, even destroying whole towns as was the case during the outbreaks in 1999 and 2016.
Most standard home insurance policies contain language covering the types of damage typically caused by tornadoes, without specifically covering tornado events.
But statistically speaking, as many as 64% of policyholders are likely to be underinsured when a tornado strikes.
So while things like wind, wind-driven rain, and falling objects are most often covered in standard policies, it’s a good idea to talk with your insurance professional to get clear on what exclusions or limitations may apply within your policy.
Whether the damage is caused by a nasty storm or a propane grill explosion, a typical homeowners policy offers coverage, and it pays to be clear on exactly what the policy covers.
If, for example, an intruder enters your home by force and breaks a window or door to gain entrance, a standard insurance policy will cover the cost to repair the damage. That same policy likely also covers the possessions stolen during the burglary.
It’s important to understand most standard policies have limits on how much they will reimburse for specific types of possessions. An insurance agent can help you understand whether your standard policy provides adequate coverage, or if you should consider purchasing additional coverage.
Personal Liability Exposures
This important coverage provides protection for the homeowner from liabilities and exposures that come with owning a home.
Say your next door neighbor is attending a book club gathering at your home on a rainy night and slips on your steps on his way out the door. He could sue you--- the homeowner--- for medical bills and lost wages since the injury was sustained on your property. A standard homeowners policy offers coverage in such an event.
Additional Costs Resulting From A Loss
If you incur additional costs as the direct result of damage to or loss of your home, a standard home insurance policy will cover those expenses.
If a fire makes your home uninhabitable, for example, and you need to make temporary living arrangements while repairs are being made, an insurance likely covers things like lodging expenses.
Again, as with most things, it pays to read the fine print. Be sure to check your policy limit for additional costs like these, and talk with your agent if you feel you’d benefit from more coverage.
#2 Can I Add Other Types of Coverage If I Need Them?
Insurance add-ons are available for a number of different circumstances so it’s important to go over yours in detail with your insurance agent before purchasing additional coverage.
Add-ons can include things like water backup and sump pump overflow. But in some cases, homeowners elect to purchase add-ons to beef up insurance coverage provided by their standard homeowner’s policy.
One such option is replacement cost insurance, which offers coverage in an amount that it would cost to buy a replacement item of the same quality and material as the original item.
For instance, many standard home insurance policies will provide coverage for what are known as “Scheduled items,” which include valuables like jewelry and art.
However, this coverage is typically limited to anywhere from $500 to $2,000 for stolen items, while lost items aren’t generally covered at all.
That’s where additional coverage through a homeowners policy endorsement of scheduled jewelry, art, guns etc. can provide peace of mind for homeowners with personal property in excess of a few thousand dollars.
#3 Which Policy is Right For Me?
The reality is, there are no one-size-fits-all solutions when it comes to homeowners insurance. The rule of thumb is to use the ‘Goldilocks Principle,’ that is, aim for a policy that’s just right for your specific situation.
A modest, newly constructed condominium in Oklahoma City or Tulsa is going to require a very different homeowners policy than an estate spread over many acres with several structures in addition to a large, turn of the century home. And a homeowner that rents property to tenants might need something like a commercial property policy or landlord insurance.
The bottom line is you don’t want to be overinsured, but homeowners who are underinsured often find out only after they file a claim and are met with an unpleasant surprise. That’s where the Goldilocks analogy for choosing coverage is helpful.
Selecting an insurance agency with knowledgeable professionals and a wide range of products to choose from is key if you’re looking to purchase coverage that’s just right.
#4 How Much Will I Pay for Home Insurance in Oklahoma?
The national average annual premium, as of 2019, is 3.5% of the home’s value. Oklahoma’s average annual premium is higher than the national average due, in part, to the increased risk of natural disaster. Ultimately, homeowners insurance rates come down to several factors, including:
- the type of coverage you’re buying
- deductible levels
- your individual risk factors.
As is the case with most insurance policies, a high deductible usually means lower home insurance cost.
However, you should take into consideration an important variable when making a decision about which policy is the best fit for your needs:
you will be responsible for paying 100% of the deductible in the event of a loss, and that’s true whether you are at fault or not.
Another important piece of advice is to get an accurate assessment of your home’s replacement value, as well as the belongings within it. It’s not a good idea to purchase a homeowners policy if you don’t have a good, solid and reasonably recent estimate of what your home and valuables replacement values are worth.
Finally, factors like claim history (whether you’ve had a recent or multiple claims in the past), the age of your home, whether you have a swimming pool and even things like owning certain breeds of dogs can have an effect on the price of your policy.
Lots of home insurance companies are happy to provide a quote for free.
Ask about the different types of coverage and have an agent assess your needs, risk factors and unique circumstances to determine which policy is right for you.
#5 Are There Ways To Save Money?
Once your agent has a thorough understanding of your needs, ask about discounts and how you might be able to save money given your specific circumstances.
Often, insurance companies will offer:
- Multi-policy discounts, if you buy additional policies like car insurance
- Easy pay plans with discounts attached
- Discounts if you haven’t had a recent claim
- Discounts if you have fire and theft prevention measures in place
- Early signing discounts if you renew before your policy expires
- Customer loyalty discounts
- New customer discounts
- Discounts if you own a recently or newly constructed home
- Discounts to retired persons
- Discounts for homes that are smoke-free have storm shutters, hail resistant roots, and other risk-reducing factors
A good agent will be delighted to walk you through the different discounts for which you might qualify, so don’t be shy about asking.
Choose The Right Insurance Specialist
Given the many and varied factors to consider when purchasing a homeowners policy, it’s crucial that you choose an insurance specialist who’s knowledgeable, experienced, and who offers creative solutions with your best interest in mind.
At Thrive Insurance, our goal is to provide creative answers that are just right to meet our clients’ specific needs. We’re homeowners insurance policy experts. We don’t make mindless insurance quotes that don’t make sense for you. We don’t give half-hearted answers to your questions. Nor do we upsell with needless products, or take risky short cuts. We are an independent agency, which means that we work on behalf of our clients. We don’t represent just one insurance company, such as Liberty Mutual or State Farm.
We can take your situation, no matter how simple or complex, and put together the best homeowners insurance option for you.
We’re passionate about building long term relationships with our clients and collaborating with them to determine the right solution, no matter how big the challenge or how long it takes. Interested in learning more? Let’s talk.